Many people wonder if they can become a millionaire right now by investing in real estate. That's probably one of the most common questions in 2023 for those thinking about real estate investing. But can you really get rich during an economic recession?
In this blog post, we will go over what we learned from our guest expert, Thach Nguyen. Thach has invested in real estate through four economic cycles and breaks down how he has navigated to come out on top every time.
Thach's Background
Thach started investing in real estate back in 1991 as a realtor. After over 30 years in the business, he has built an impressive portfolio of properties. He has amassed over $100 million worth of real estate!
He started with no money. His family immigrated to the U.S. from Vietnam in 1975 with just $100 to their name. Through tirelessly working as a realtor, he saved up commissions to start buying investment properties.
Thach still actively looks for deals today through strategies like door-knocking, cold calling, and direct mail. He buys houses to rehab and rent out, builds multifamily properties, and develops land into townhomes and apartment buildings.
Key Takeaways from That
Follow the 30% Rule
Thach has a 30% rule when evaluating deals. After purchase and rehab costs, the deal must have at least a 30% margin. If a deal doesn't meet this hurdle rate, he will typically wholesale or flip the property instead of keeping it as a rental.
Think Long-Term
Thach's goal is to buy properties and hold them forever as rentals. This builds true wealth over time versus just getting rich quick. For example, he still owns his first rental property purchased in 1997 for $105k. It's now worth over $750k and he is adding an ADU to increase the value further over $1M!
Add Value
In addition to buying undervalued properties, Thach is always looking for ways to add value. In Seattle, he is adding ADUs (accessory dwelling units) to virtually all of his qualifying single-family rental properties.
Scale is Key
While it's possible to get rich with just a few deals, building long-term, generational wealth requires scaling up to larger multifamily and commercial projects. Thach now focuses heavily on apartment complexes in addition to his bread and butter single-family rentals.
How to Navigate an Economic Recession
With the background on Thach's investing approach, here is his playbook for navigating the current recession we face in 2023:
Understand the Cycles
Every market operates in cycles, with periods of ups and downs. The key is first understanding where you currently stand in the cycle. For an in-depth understanding the real estate market, you can check out our blog on just that. Thach recognizes we are now clearly in a downcycle phase.
Adjust Your Criteria
In down markets, you must get more conservative with deals. Thach recommends adjusting your buying criteria to be more strict. Require even higher margins and discounts than you normally would.
Focus on Marketing
When the market shifts, double down on lead generation through marketing channels like direct mail, driving for dollars, and cold calling. Motivated sellers will appear, but you have to put in the work to find them.
Build Your Buyer List
Along with finding motivated sellers, also build up your cash buyer list. Have these relationships ready so you can quickly wholesale deals that don't meet your buying criteria.
Be Patient
Trying to time or predict exactly when the market will shift is futile. Perfect your marketing and lead gen so you're ready when opportunities arise, but also be patient and persistent.
Final Thoughts
Thach Nguyen shows that massive success in real estate is possible, in any market cycle, when you use proven strategies. He still relies on old-school tactics like door-knocking and direct mail. He buys with a large margin of safety and focuses on long-term holds.
Most importantly, he takes action consistently over decades. Thach proves that with hard work and perseverance, you can build life-changing wealth through real estate, even starting with very little.
